Avionics May Be Major Component of Japan's Renewed Interest in Arms Exports

By: Business Week May 06, 2014

The Japanese government has long banned most weapons exports. That policy helped buttress Japan's pacifism, but it also hindered the growth of the country's defense industry. Because it couldn't sell parts overseas, Japanese defense companies missed out on chances to develop fighter jets, tanks and other weaponry with the U.S. That's changing.

In April, the government of Japan’s conservative prime minister, Shinzo Abe, lifted a ban from the 1970s that restricted arms exports. However, the opportunities for Japan to grab market share won’t be in building entire weapons systems such as jet fighters or aircraft carriers. Japanese companies have a competitive edge in building high-end components, particularly electronics. “You may have fighter jets and warships from different manufacturers, but the electronics inside those ships and planes have to be able to communicate and share data with each other,” says Robbin Laird, a defense industry consultant with International Communications & Strategic Assessments in Arlington, Va. “What you really care about are the electronics inside, and that’s what Japan does best.”